Shares of Fastly, Inc. (FSLY) extended their dramatic rally in premarket activity on Friday, February 13, 2026, climbing an additional 5.1% to $16.86. This move followed an explosive 72.3% surge during Thursday's regular session, which closed at $16.04. The substantial gains are a direct reaction to the company's fourth-quarter 2025 earnings report, which showcased robust financial performance and an optimistic long-term forecast.
Strong Quarterly Results and Upbeat Guidance
Fastly reported a significant 23% year-over-year increase in fourth-quarter revenue, reaching $172.6 million. On an adjusted basis, which excludes certain non-core expenses, the company earned 12 cents per share. Looking ahead, management provided first-quarter 2026 revenue guidance in the range of $168 million to $174 million, with adjusted earnings per share projected between 7 and 10 cents. More notably, the company issued a bullish outlook for the full 2026 fiscal year, targeting revenue of $700 million to $720 million and adjusted EPS of 23 to 29 cents. CEO Kip Compton characterized the latest period as an "inflection" point for the business.
Key Financial and Operational Metrics
Beyond the top-line growth, several other metrics underscored the company's strengthening position. Remaining performance obligations, a measure of contracted revenue not yet recognized, soared 55% to $353.8 million. Security revenue, a critical segment, grew 32% to $35.4 million. The company ended the quarter with 628 enterprise customers, and its net retention rate improved to 110%. Fastly also bolstered its balance sheet by raising $180 million through the issuance of 0% convertible notes due in 2030, while simultaneously spending $149 million to repurchase notes maturing in 2026.
Market analysts immediately began dissecting the drivers behind the impressive results. Jonathan Ho of William Blair, who upgraded the stock, highlighted the "rising contribution from agentic AI traffic" as a pivotal factor. Agentic AI refers to autonomous software agents that perform tasks with minimal human intervention, potentially generating a substantial new wave of data requests for content delivery networks (CDNs) like Fastly to handle. This commentary suggests investors are betting on Fastly as a direct beneficiary of proliferating artificial intelligence applications.
Market Context and Sector Reaction
The positive sentiment spilled over into the broader CDN and edge computing sector. Shares of competitor Akamai Technologies (AKAM) jumped more than 10% as traders looked for correlated opportunities. Other players in the web delivery and security space, such as Cloudflare (NET), are also watched closely in this context. However, the trading in Fastly itself was exceptionally volatile on Thursday; the stock swung between $13.38 and $17.86 with a massive 116.2 million shares changing hands, an extraordinary volume level for a company of its market capitalization.
Adding to the bullish narrative, an institutional filing revealed that Morgan Stanley (MS) has accumulated a 5.4% stake in Fastly, owning approximately 8.07 million Class A shares as of a recent filing date. This significant investment from a major financial institution provided further validation for some market participants.
Analyst Caution and Concentration Risks
Despite the euphoria, several analysts struck a note of caution, pointing to the stock's massive run-up and lingering fundamental risks. D.A. Davidson's Rudy Kessinger, while raising his price target to $13, maintained a "hold" rating. He specifically cited concerns over customer concentration, noting that Fastly's ten largest clients accounted for 34% of total revenue in the latest quarter. This dependency on a handful of major customers introduces a material risk if any were to reduce spending or churn. The sharp appreciation also means the stock now has little room for execution error, embedding high expectations into its current valuation.
The broader market backdrop also presents a challenge. Technology shares faced pressure on Thursday as investors awaited the release of key U.S. inflation data on Friday. As a growth-oriented, rate-sensitive name, Fastly remains vulnerable to shifts in macroeconomic sentiment and interest rate expectations. The central question for traders is whether the powerful demand demonstrated in the last two sessions will persist after the inflation report, or if the spectacular gains will partially retrace once new economic data is factored into the market.
